COTE D'IVOIRE OFFERS LARGE TRACTS

Cote d'Ivoire has opened an international bidding round for production sharing contracts (PSCs) on three blocks that lie mainly in the Gulf of Guinea.

Qualified offers resulting in PSCs signed before Apr. 30, 1994, will be allowed special incentives designed to speed oil and gas development.

The tender is part of a plan through which Cote d'Ivoire hopes to encourage domestic economic growth by stimulating enough oil and gas production to become energy self-sufficient.

Oil & Gas Journal estimated Cote d'Ivoire oil output in 1992 at about 1,500 b/d (OGJ, Dec. 28, 1992, p. 45). However, officials of state oil company Ste. Nationale d'Operations Petrolieres de la Cote d'Ivoire (Petroci) said the small West African nation produces no oil at present.

As a result, Cote d'Ivoire imports enough crude to feed Ste. Ivoirienne de Raffinage's 59,000 b/cd refinery in the capital city of Abidjan. About one-third of the plant's refined product output is needed to meet domestic demand.

Cote d'Ivoire in December 1992 amended laws covering petroleum PSCs and service contracts to liberalize terms and take a more active role in developing its oil and gas resources. Combined with recent tax law revisions, the new legal framework is intended to spur investment in petroleum exploration and development.

To help Cote d'Ivoire achieve its economic goals, each company achieving commercial production under a PSC awarded in the tender will be required to sell 10% of its share of profit oil or gas to Petroci at 75% of a calculated market price. Losses occurring because of the 25% price differential may be recovered from future production as cost oil or gas.

BLOCKS OFFERED

Tracts included in Cote d'Ivoire's offshore tender lie within the Abidjan margin on the republic's continental shelf.

All of Cote d'Ivoire's oil and gas exploration and development has occurred on the margin, where the shelf is underlain by a thick sedimentary section extending far offshore. All told, 78 exploratory and 32 development wells have been drilled on the Abidjan margin and 39,456 line km of 3D seismic and 31,720 line km of 2D seismic collected.

Water depths on the blocks range to 2,000 m, but most of the prospective oil and gas areas are in less than 200 m of water:

• Block 93-C1-01 is a 5,796 sq km irregularly shaped tract on which about 26,562 line km of 3D seismic data and 2,256 line km of 2D data have been collected.

• Block 93-C1-02 is a 4,012 sq km tract. About 2,943 line km of 2D seismic data have been collected on the block.

• Block 93-C1-03 is a 5,833 sq km tract on which about 3,912 line km of 2D seismic data are available.

Within Block 2, but not included in the current tender, is Belier field, a 1974 discovery productive from upper Cretaceous lower Senonian sandstones at 1,885-2,005 m below sea level.

In Block 3, but not being offered, are Foxtrot and Espoir fields, discovered in 1981 and 1979, respectively. Foxtrot hydrocarbons occur in Cretaceous upper Albian sandstones at 2,100-2,503 m below sea level, while Espoir is productive from Albian sandstones at 1,800-2,136 m below sea level.

All the blocks also hold several undeveloped oil and gas discoveries.

OFFSHORE PROSPECTS

Much of offshore Cote d'Ivoire's oil and gas prospectivity is defined by seismic and well data. Hydrocarbon's within the coastal basin are trapped mainly in rift habitat and postrift or drift habitat.

Primary rift objectives include intra-Albian and upper Albian traps, while postrift/drift opportunities are mainly Cenomanian to Maastrichtian. Main Abidjan margin reservoirs are found in Maastrichtian, lower Senonian, and Albian intervals.

Presence of sand is the main factor affecting Albian trapping. Extensional fault blocks are the primary Albian tectonic style, and possible traps are linked to sealing by normal faults. Areal closures are about 15 sq km, with vertical closures of 80 m. Down to basement faults are predominant, with throws of as much as 1,000 m.

Some of the most obvious Cenomanian traps have been drilled, including block edge folds superimposed on Albian paleo highs that gain relief as a result of differential compaction. Although more limited than at Albian depths, Cenomanian areal closures are significant.

Sandy intervals are found mostly in lower Senonian strata, and depth maps show strong attenuation of structural closures, compared with Albian levels. Possible lower Senonian prospects are present on the Belier-Assinie ridge, provided stratigraphy can be mapped accurately and stratigraphic controls understood.

Maastrichtian sand bodies detected so far are typically channel depositions, with cumulative thicknesses of individual beds amounting to as much as 85 m and average porosity of 20%. Structural control of Maastrichtian objectives is limited to undulations superimposed on top of Albian ridges.

Most of the prospective Maastrichtian area is associated with a delta system active in the Cenomanian and lower Senonian.

PSC REQUIREMENTS, INCENTIVES

As set out in the 1992 law and further defined in an April 1993 decree, many PSC terms covering the three offshore tracts are negotiable.

Perhaps foremost, PSCs signed before Apr. 30, 1994, need not include a signature bonus. Production sharing contractors will not have to pay royalties on production and will be exempt from all taxes except the national income tax.

Cote d'Ivoire recently reduced its income tax rate to 35% from 50%.

Bids received before the deadline will be opened in the order received. Negotiations for acreage could begin after review of any bid, in which case the government will announce whether serious talks are in progress and whether bids still are being accepted.

Cote d'Ivoire's new PSC includes an exploration period led by one 3 year phase and followed by two additional 2 year phases, a 2 year appraisal period, and a 25 year exploitation period. Extensions may be granted during all three periods, including:

• As many as 90 days during an exploration phase to complete a production test or abandon an exploratory well.

• During appraisal, an additional 2 years to appraise an oil discovery and 4 years for a gas discovery.

• Two extensions during development and production, the first for as long as 10 years.

Twenty-five percent of each block must be relinquished at the end of the initial 3 year exploration phase and another 25% after the first 2 year additional exploration phase.

Production sharing contractors will be required to carry Petroci through the exploration period with a 10% interest. In case of a commercial discovery, Petroci may increase its interest to as much as 30%.

If at declaration of a gas field's commerciality a market is not available, the contractor will be allowed to extend his rights for as long as 5 years.

PSC BIDDABLE TERMS

Bidders are expected to propose minimum work commitments and estimated costs of the work program. Exploratory wells drilled in excess of phase requirements may be carried forward into the first phase following.

Other biddable items include percentages of cost oil, profit oil splits, production bonuses, and annual training budgets. Proposed cost recovery percentages may vary according to water depth and daily production volumes. PSC applicants will be required to bid production bonuses based on threshold oil volumes of 30,000 b/d, 50,000 b/d, and 100,000 b/d.

Shares of profit oil or gas are negotiable based either on specified production increments and water depths or on the ratio of cumulative net income divided by cumulative investments. Splits of profit oil produced in less than 200 m of water should vary within the following production windows: 0-10,000 b/d, 10,001-20,000 b/d, 20,001-30,000 b/d, and more than 30,000 b/d. In water more than 200 m deep, splits should differ if production ranges from 0-25,000 b/d, 25,001-50,000 b/d, and more than 50,000 b/d.

Shares of profit gas from fields in less than 100 m of water will vary if gas production is 0-75 MMcfd, 75-150 MMcfd, and more than 150 MMcfd. In water more than 100 m deep, shares of gas should be proposed for production of 0-150 MMcfd and more than 150 MMcfd.

Contractors' shares of profit oil or gas may be calculated either before or after payment of income taxes.

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